US Dollar gains strength after Yellen speech and positive reports

February 15, 2017 – Yesterday’s speech by Fed’s Janet Yellen have provided the much-needed boost to US Dollar; USD was struggling to gain strength against JPY, GBP, EUR, and other currencies in the past few weeks. The overall sentiment is still looking positive as investors are betting on the banking and other business reforms that Trump is promising to implement. These reforms are meant to boost the income of businesses and corporations. Trump’s business reforms have kept USD strong, but in the last few weeks, it has lost some of the juice; this changed, though, after yesterday’s bullish speech by Yellen.

Yellen said that a rate-hike looks appropriate in next Fed meeting; this announcement is really big for Forex traders. You can expect USD to gain ground against all major currency pairs. This is what I am seeing right now; USD is currently the strongest currency in the Forex market. Many US economic reports came out today; these include Monthly Retail Sales and Consumer Price Index [Monthly and Yearly as well.] Almost every economic report today showed positive figures. CPI [YoY] increased from 2.1% to 2.5%. Analysts were predicting an increase to 2.4% but the actual figure was even better than the expert expectations.

These positive reports are fueling the possibility of the next rate hike in the upcoming Fed meeting. We all know that Fed watch the economic data and they base their rate decisions on them. The strong employment market in USA and the increased CPI of 2.5% is telling us that Fed might hike rate pretty soon…

With today’s batch of US economy data, the fed is on course to raise interest rate in the upcoming meeting. Yellen in her speech pointed that if they [Fed] are slow in increasing the interest rate, then they might have to increase it faster [later on,] which could increase the risk of a recession. She also pointed out the fact that there is a lot of economic uncertainty under Trump’s administration. This seems to be the only problem with current US economic outlook. The Federal Reserve does not know what policies they will follow, as everything is unclear. The Trump administration seems to be busy in fighting with the Media and now Judges/Court as well. His current priorities seem to be banning people from Muslim majority countries and to crack down on illegal immigrants in USA.

Despite the strong labor and retail market, the future of USD pretty much depends on what currency-strength policy Mr. Trump is going to adopt. He has talked about how countries we making more money by weakening their own currency; if Trump wants USD to get weak, then that can easily happen. He just has to announce this policy and Forex Traders will do the rest…